CrowdStrike Holdings, Inc.

Previous wording

Invest in Growth. We believe that our market opportunity is large and requires us to continue to invest significantly in sales and marketing efforts to further grow our customer base, both domestically and internationally. Our open cloud architecture and single data model have allowed us to rapidly build and deploy new cloud modules, and we expect to continue investing in those efforts to further enhance our technology platform and product functionality. In addition to our ongoing investment in research and development, we may also pursue acquisitions of businesses, technologies, and assets that complement and expand the functionality of our Falcon platform, add to our technology or security expertise, or bolster our leadership position by gaining access to new customers or markets. Furthermore, we expect our general and administrative expenses to increase in dollar amount for the foreseeable future given the additional expenses for accounting, compliance, and investor relations as we grow as a public company.

Current wording

Invest in Growth. We believe that our market opportunity is large and requires us to continue to invest significantly in sales and marketing efforts to further grow our customer base, both domestically and internationally. Our open cloud architecture and single data model have allowed us to rapidly build and deploy new cloud modules, and we expect to continue investing in those efforts to further enhance our technology platform and product functionality. In addition to our ongoing investment in research and development, we may also pursue acquisitions of businesses, technologies, and assets that complement and expand the functionality of our Falcon platform, add to our technology or security expertise, or bolster our leadership position by gaining access to new customers or markets. Furthermore, we expect our general and administrative expenses to increase in dollar amount for the foreseeable future given the additional expenses for accounting, compliance, and investor relations as we grow.

Previous wording

July 19 Incident. On July 19, 2024, we released a content configuration update for our Falcon sensor that resulted in system crashes for certain Windows systems (the “July 19 Incident”). As a result of the July 19 Incident, we are subject to lawsuits, claims and inquiries as described in Note 10, “Commitments and Contingencies,” to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q. We have incurred, and expect to continue to incur, significant legal and professional services and other general and administrative expenses associated with the July 19 Incident in future periods. It is not reasonably possible to quantify the precise impact of the July 19 Incident, but the incident has adversely affected our results of operations, and we currently expect a number of factors relating to the incident to adversely affect our key metrics and results of operations in future periods. While we have maintained high dollar-based gross retention rates following the incident, we have experienced delays in creating sales opportunities and longer sales cycles, including delays in customer purchasing decisions. We expect sales cycles to continue to be elongated in future periods. In addition, because our customers typically sign contracts with terms of twelve months or longer, customer churn and any corresponding impact to our key metrics and revenue may occur in future periods. Customer commitment packages introduced following the July 19 Incident have included discounting, additional modules, professional services, flexible payment terms or subscription period extensions. Our customer commitment packages have resulted, and are expected to continue to result, in increased contraction, due to elongated subscription terms, and decreased upsell dollar values.

Current wording

July 19 Incident. On July 19, 2024, we released a content configuration update for our Falcon sensor that resulted in system crashes for certain Windows systems (the “July 19 Incident”). As a result of the July 19 Incident, we are subject to lawsuits, claims and inquiries as described in Note 10, “Commitments and Contingencies,” to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q. We have incurred, and expect to continue to incur, significant legal and professional services and other general and administrative expenses associated with the July 19 Incident in future periods. It is not reasonably possible to quantify the precise impact of the July 19 Incident, but the incident has adversely affected our results of operations, and we currently expect a number of factors relating to the incident to adversely affect our key metrics and results of operations in future periods. While we have maintained high dollar-based gross retention rates following the incident, we have experienced delays in creating sales opportunities and longer sales cycles, including delays in customer purchasing decisions. Sales cycles may be elongated in future periods. In addition, because our customers typically sign contracts with terms of twelve months or longer, customer churn and any corresponding impact to our key metrics and revenue may occur in future periods. Customer commitment packages introduced following the July 19 Incident have included discounting, additional modules, professional services, flexible payment terms or subscription period extensions. Our customer commitment packages have resulted, and are expected to continue to result, in increased contraction, due to elongated subscription terms, and decreased upsell dollar values.

Previous wording

ARR grew to $4.7 billion as of July 31, 2025, of which $221.1 million and $414.8 million was net new ARR added for the three and six months ended July 31, 2025, respectively. ARR grew to $3.9 billion as of July 31, 2024, of which $217.6 million and $429.3 million was net new ARR added for the three and six months ended July 31, 2024, respectively.

Current wording

ARR grew to $4.9 billion as of October 31, 2025, of which $265.3 million and $680.2 million was net new ARR added for the three and nine months ended October 31, 2025, respectively. ARR grew to $4.0 billion as of October 31, 2024, of which $153.0 million and $582.3 million was net new ARR added for the three and nine months ended October 31, 2024, respectively.

Previous wording

Our dollar-based net retention rate continued to be strong as of July 31, 2025. Our dollar-based net retention rate can fluctuate from period to period due to large customer contracts in a given period and incentives provided, which may reduce our dollar-based net retention rate in subsequent periods. In addition, if our customers are not able to fully utilize their product subscriptions (including in connection with our flexible subscription offering), we may experience increased contraction as such customers may elect to renew with shorter subscription periods, fewer cloud modules, fewer endpoints or smaller contract values, which may reduce our dollar-based net retention rate.

Current wording

Our dollar-based net retention rate increased in the quarter ended October 31, 2025 over the prior quarter. Our dollar-based net retention rate can fluctuate from period to period due to large customer contracts in a given period and incentives provided, which may reduce our dollar-based net retention rate in subsequent periods. In addition, if our customers are not able to fully utilize their product subscriptions (including in connection with our flexible subscription offering), we may experience increased contraction as such customers may elect to renew with shorter subscription periods, fewer cloud modules, fewer endpoints or smaller contract values, which may reduce our dollar-based net retention rate.

Previous wording

Total revenue increased by $205.1 million, or 21%, for the three months ended July 31, 2025 compared to the three months ended July 31, 2024. Subscription revenue accounted for 94% and 95% of total revenue for the three months ended July 31, 2025 and July 31, 2024, respectively. Professional services revenue accounted for 6% and 5% of our total revenue for the three months ended July 31, 2025 and July 31, 2024, respectively.

Current wording

Total revenue increased by $224.1 million, or 22%, for the three months ended October 31, 2025 compared to the three months ended October 31, 2024. Subscription revenue accounted for 95% of total revenue for each of the three months ended October 31, 2025 and October 31, 2024. Professional services revenue accounted for 5% of our total revenue for each of the three months ended October 31, 2025 and October 31, 2024.

Previous wording

Subscription revenue increased by $184.7 million, or 20%, for the three months ended July 31, 2025 compared to the three months ended July 31, 2024, which was primarily driven by a combination of the addition of new customers and the sale of additional sensors and modules to existing customers.

Current wording

Subscription revenue increased by $206.0 million, or 21%, for the three months ended October 31, 2025 compared to the three months ended October 31, 2024, which was primarily driven by a combination of the addition of new customers and the sale of additional sensors and modules to existing customers.

Previous wording

Professional services revenue increased by $20.4 million, or 45%, for the three months ended July 31, 2025, compared to the three months ended July 31, 2024, which was primarily attributable to an increase in the number of professional service hours.

Current wording

Professional services revenue increased by $18.1 million, or 38%, for the three months ended October 31, 2025, compared to the three months ended October 31, 2024, which was primarily attributable to an increase in the number of professional service hours.

Previous wording

Total cost of revenue increased by $72.9 million, or 31%, for the three months ended July 31, 2025 compared to the three months ended July 31, 2024. Subscription cost of revenue increased by $53.7 million, or 27%, for the three months ended July 31, 2025, compared to the three months ended July 31, 2024. The increase in subscription cost of revenue was primarily due to an increase in employee-related expenses of $13.6 million driven by a 19% increase in average headcount, an increase in cloud hosting and related services costs of $12.9 million, an increase in depreciation of data center equipment of $7.3 million, an increase in stock-based compensation expense of $6.6 million, an increase in amortization of internal-use software of $5.8 million, an increase in allocated overhead costs of $3.9 million, and charges related to the Plan (as defined

Current wording

Total cost of revenue increased by $52.7 million, or 21%, for the three months ended October 31, 2025 compared to the three months ended October 31, 2024. Subscription cost of revenue increased by $41.6 million, or 19%, for the three months ended October 31, 2025, compared to the three months ended October 31, 2024. The increase in subscription cost of revenue was primarily due to an increase in cloud hosting and related services costs of $11.3 million, an increase in employee-related expenses of $8.6 million driven by a 17% increase in average headcount, an increase in depreciation of data center equipment of $8.3 million, an increase in amortization of internal-use software of $5.8 million, an increase in allocated overhead costs of $5.0 million, and an increase in stock-based compensation expense of $5.0 million.

Previous wording

Professional services gross margin decreased by ten percentage points for the six months ended July 31, 2025, compared to the six months ended July 31, 2024. The decrease in professional services gross margin was primarily due to an increase in consulting expense during the six months ended July 31, 2025.

Current wording

Professional services gross margin increased by six percentage points for the three months ended October 31, 2025, compared to the three months ended October 31, 2024. The increase in professional services gross margin was primarily due to an increase in the number of professional service hours, partially offset by an increase in consulting expense during the three months ended October 31, 2025.

Previous wording

Sales and marketing expenses increased by $91.6 million, or 26%, for the three months ended July 31, 2025 compared to the three months ended July 31, 2024. The increase in sales and marketing expenses was primarily due to an increase in employee-related expenses of $46.2 million driven by a 11% increase in average headcount, an increase in stock-based compensation expense of $11.1 million, an increase in marketing programs of $10.6 million, charges related to the Plan of $8.7 million, an increase in employee benefits of $5.1 million, an increase in allocated overhead costs of $4.6 million, and an increase in travel expenses of $2.2 million, partially offset by a decrease in expenses associated with the July 19 Incident and related matters of $3.0 million, and a decrease in company events expenses of $2.1 million.

Current wording

Sales and marketing expenses increased by $72.8 million, or 18%, for the three months ended October 31, 2025 compared to the three months ended October 31, 2024. The increase in sales and marketing expenses was primarily due to an increase in employee-related expenses of $36.6 million driven by a 10% increase in average headcount, an increase in stock-based compensation expense of $17.5 million, an increase in marketing programs of $9.0 million, an increase in allocated overhead costs of $5.3 million, an increase in employee benefits of $4.5 million, an increase in cloud hosting and related services costs of $4.5 million, and an increase in travel expenses of $2.4 million, partially offset by a decrease in expenses associated with the July 19 Incident and related matters of $14.9 million.

Previous wording

Research and development expenses increased by $95.8 million, or 38%, for the three months ended July 31, 2025 compared to the three months ended July 31, 2024. This increase was primarily due to an increase in stock-based compensation expense of $31.2 million, an increase in employee-related expenses of $30.2 million driven by a 19% increase in average headcount, charges related to the Plan of $16.7 million, an increase in cloud hosting and related costs of $10.6 million, an increase in allocated overhead costs of $6.1 million, and an increase in employee benefits of $4.5 million, partially offset by an increase in software capitalization of $2.8 million.

Current wording

Research and development expenses increased by $72.0 million, or 26%, for the three months ended October 31, 2025 compared to the three months ended October 31, 2024. This increase was primarily due to an increase in stock-based compensation expense of $27.2 million, an increase in employee-related expenses of $26.6 million driven by a 17% increase in average headcount, an increase in cloud hosting and related costs of $9.9 million, an increase in allocated overhead costs of $7.7 million, and an increase in employee benefits of $2.4 million, partially offset by an increase in software capitalization of $0.5 million, and a decrease in other labor expense of $2.5 million.

Previous wording

General and administrative expenses increased by $71.5 million, or 67%, for the three months ended July 31, 2025 compared to the three months ended July 31, 2024. The increase in general and administrative expenses was primarily due to an increase in expenses associated with the July 19 Incident and related matters of $34.3 million, an increase in stock-based compensation expense of $17.8 million, charges related to the Plan of $6.1 million, an increase in employee-related expenses of $2.8 million driven by a 15% increase in average headcount, an increase in consulting expense of $2.3 million, an increase in legal expense of $1.7 million unrelated to the July 19 Incident or related matters, and an increase in term-based software licenses of $1.0 million.

Current wording

General and administrative expenses increased by $40.3 million, or 32%, for the three months ended October 31, 2025 compared to the three months ended October 31, 2024. The increase in general and administrative expenses was primarily due to an increase in stock-based compensation expense of $22.4 million, an increase in expenses associated with the July 19 Incident and related matters of $9.1 million, an increase in consulting expense of $3.2 million, an increase in employee-related expenses of $2.3 million driven by a 18% increase in average headcount, and an increase in allocated overhead costs of $1.2 million.

Previous wording

The following shows interest expense, interest income, and other expense, net for the three months ended July 31, 2025 as compared to the three months ended July 31, 2024 (in thousands, except percentages):

Current wording

The following shows interest expense, interest income, and other income (expense), net for the three months ended October 31, 2025 as compared to the three months ended October 31, 2024 (in thousands, except percentages):

Previous wording

The decrease in interest income for the three months ended July 31, 2025 compared to the three months ended July 31, 2024 was driven by lower market rates, partially offset by a higher cash balance.

Current wording

The decrease in interest income for the three months ended October 31, 2025 compared to the three months ended October 31, 2024 was driven by lower market rates, partially offset by higher cash balance.

Previous wording

The increase in other expense, net for the three months ended July 31, 2025 compared to the three months ended July 31, 2024 was primarily due to an increase in net foreign currency transaction losses of $2.7 million, partially offset by a decrease in realized losses from strategic investments of $0.7 million and an increase in gains from deferred compensation assets of $0.6 million.

Current wording

The increase in other income (expense), net for the three months ended October 31, 2025 compared to the three months ended October 31, 2024 was primarily due to an increase in net foreign currency transaction gains of $1.6 million, and an increase in gains from deferred compensation assets of $0.5 million.

Previous wording

The increase in provision for income taxes of $8.5 million during the six months ended July 31, 2025 compared to the six months ended July 31, 2024 was primarily attributable to income taxes in foreign jurisdictions and withholding taxes related to customer payments in certain foreign jurisdictions in which the Company conducts business.

Current wording

The increase in provision for income taxes of $4.4 million during the three months ended October 31, 2025 compared to the three months ended October 31, 2024 was primarily attributable to income taxes in foreign jurisdictions and withholding taxes related to customer payments in certain foreign jurisdictions in which the Company conducts business.

Previous wording

The following shows total revenue from subscriptions and professional services for the six months ended July 31, 2025 as compared to the six months ended July 31, 2024 (in thousands, except percentages):

Current wording

The following shows total revenue from subscriptions and professional services for the nine months ended October 31, 2025 as compared to the nine months ended October 31, 2024 (in thousands, except percentages):

Previous wording

Total revenue increased by $387.5 million, or 21%, for the six months ended July 31, 2025 compared to the six months ended July 31, 2024. Subscription revenue accounted for 95% total revenue for both the six months ended July 31, 2025 and July 31, 2024. Professional services revenue accounted for 5% of our total revenue for both the six months ended July 31, 2025 and July 31, 2024.

Current wording

Total revenue increased by $611.5 million, or 21%, for the nine months ended October 31, 2025 compared to the nine months ended October 31, 2024. Subscription revenue accounted for 95% total revenue for both the nine months ended October 31, 2025 and October 31, 2024. Professional services revenue accounted for 5% of our total revenue for both the nine months ended October 31, 2025 and October 31, 2024.

Previous wording

Subscription revenue increased by $363.3 million, or 20%, for the six months ended July 31, 2025 compared to the six months ended July 31, 2024, which was primarily driven by a combination of the addition of new customers and the sale of additional sensors and modules to existing customers.

Current wording

Subscription revenue increased by $569.3 million, or 21%, for the nine months ended October 31, 2025, compared to the nine months ended October 31, 2024, which was primarily driven by a combination of the addition of new customers and the sale of additional sensors and modules to existing customers.

Previous wording

Professional services revenue increased by $24.2 million, or 26%, for the six months ended July 31, 2025, compared to the six months ended July 31, 2024, which was primarily attributable to an increase in the number of professional service hours.

Current wording

Professional services revenue increased by $42.3 million, or 30%, for the nine months ended October 31, 2025, compared to the nine months ended October 31, 2024, which was primarily attributable to an increase in the number of professional service hours.

Previous wording

The following shows cost of revenue related to subscriptions and professional services for the six months ended July 31, 2025 as compared to the six months ended July 31, 2024 (in thousands, except percentages):

Current wording

The following shows cost of revenue related to subscriptions and professional services for the nine months ended October 31, 2025 as compared to the nine months ended October 31, 2024 (in thousands, except percentages):

Previous wording

Total cost of revenue increased by $137.0 million, or 30%, for the six months ended July 31, 2025 compared to the six months ended July 31, 2024. Subscription cost of revenue increased by $106.4 million, or 27%, for the six months ended July 31, 2025, compared to the six months ended July 31, 2024. The increase in subscription cost of revenue was primarily due to an increase in employee-related expenses of $28.4 million driven by a 21% increase in average headcount, an increase in cloud hosting and related services costs of $23.2 million, an increase in stock-based compensation expense of $16.8 million, an increase in depreciation of data center equipment of $15.3 million, an increase in amortization of internal-use software of $10.5 million, an increase in allocated overhead costs of $8.7 million, and charges related to the Plan of $3.6 million.

Current wording

Total cost of revenue increased by $189.7 million, or 26%, for the nine months ended October 31, 2025 compared to the nine months ended October 31, 2024. Subscription cost of revenue increased by $148.1 million, or 24%, for the nine months ended October 31, 2025, compared to the nine months ended October 31, 2024. The increase in subscription cost of revenue was primarily due to an increase in employee-related expenses of $37.0 million driven by a 19% increase in average headcount, an increase in cloud hosting and related services costs of $34.5 million, an increase in depreciation of data center equipment of $23.7 million, an increase in stock-based compensation expense of $21.8 million, an increase in amortization of internal-use software of $16.2 million, and an increase in allocated overhead costs of $13.6 million.

Previous wording

Professional services cost of revenue increased by $19.2 million, or 51%, for the three months ended July 31, 2025, compared to the three months ended July 31, 2024. The increase in professional services cost of revenue was primarily due to an increase in consulting expenses of $9.0 million, an increase in employee-related expenses of $4.1 million driven by a 13% increase in average headcount, charges related to the Plan of $3.3 million, and an increase in stock-based compensation expense of $1.7 million.

Current wording

Professional services cost of revenue increased by $41.7 million, or 37%, for the nine months ended October 31, 2025, compared to the nine months ended October 31, 2024. The increase in professional services cost of revenue was primarily due to an increase in consulting expenses of $15.1 million, an increase in employee-related expenses of $12.5 million driven by a 13% increase in average headcount, an increase in stock-based compensation expense of $7.0 million, charges related to the Plan of $3.4 million, and an increase in allocated overhead costs of $2.1 million.

Previous wording

The following shows gross profit and gross margin for subscriptions and professional services for the six months ended July 31, 2025 as compared to the six months ended July 31, 2024 (in thousands, except percentages):

Current wording

The following shows gross profit and gross margin for subscriptions and professional services for the nine months ended October 31, 2025 as compared to the nine months ended October 31, 2024 (in thousands, except percentages):

Previous wording

Subscription gross margin slightly decreased by one percentage point for the three months ended July 31, 2025, compared to the three months ended July 31, 2024. The decrease in subscription gross margin was primarily due to an increase in stock-based compensation expense, and an increase in depreciation of data center equipment during the three months ended July 31, 2025.

Current wording

Subscription gross margin slightly decreased by one percentage point for the nine months ended October 31, 2025, compared to the nine months ended October 31, 2024. The decrease in subscription gross margin was primarily due to an increase in stock-based compensation expense, and an increase in depreciation of data center equipment during the nine months ended October 31, 2025.

Previous wording

Professional services gross margin decreased by four percentage points for the three months ended July 31, 2025, compared to the three months ended July 31, 2024. The decrease in professional services gross margin was primarily due to an increase in consulting expense during the three months ended July 31, 2025.

Current wording

Professional services gross margin decreased by four percentage points for the nine months ended October 31, 2025, compared to the nine months ended October 31, 2024. The decrease in professional services gross margin was primarily due to an increase in consulting expense during the nine months ended October 31, 2025.

Previous wording

The following shows sales and marketing expenses for the six months ended July 31, 2025 as compared to the six months ended July 31, 2024 (in thousands, except percentages):

Current wording

The following shows sales and marketing expenses for the nine months ended October 31, 2025 as compared to the nine months ended October 31, 2024 (in thousands, except percentages):

Previous wording

Sales and marketing expenses increased by $181.1 million, or 26%, for the six months ended July 31, 2025 compared to the six months ended July 31, 2024. The increase in sales and marketing expenses was primarily due to an increase in employee-related expenses of $94.2 million driven by a 13% increase in average headcount, an increase in stock-based compensation expense of $24.1 million, an increase in marketing programs of $17.4 million, an increase in allocated overhead costs of $11.4 million, an increase in employee benefits of $9.8 million, charges related to the Plan of $8.7 million, an increase in travel expenses of $8.1 million, and an increase in term-based software licenses of $2.1 million, partially offset by a decrease in company events expenses of $5.3 million, and a decrease of $2.5 million of expenses associated with the July 19 Incident and related matters.

Current wording

Sales and marketing expenses increased by $253.8 million, or 23%, for the nine months ended October 31, 2025 compared to the nine months ended October 31, 2024. The increase in sales and marketing expenses was primarily due to an increase in employee-related expenses of $130.8 million driven by a 12% increase in average headcount, an increase in stock-based compensation expense of $41.6 million, an increase in marketing programs of $26.5 million, an increase in allocated overhead costs of $16.7 million, an increase in employee benefits of $14.3 million, an increase in travel expenses of $10.5 million, charges related to the Plan of $9.1 million, and an increase in term-based software licenses of $2.8 million, partially offset by a decrease of $17.4 million of expenses associated with the July 19 Incident and related matters, and a decrease in company events expenses of $5.5 million.

Previous wording

The following shows research and development expenses for the six months ended July 31, 2025 as compared to the six months ended July 31, 2024 (in thousands, except percentages):

Current wording

The following shows research and development expenses for the nine months ended October 31, 2025 as compared to the nine months ended October 31, 2024 (in thousands, except percentages):

Previous wording

Research and development expenses increased by $194.6 million, or 40%, for the six months ended July 31, 2025 compared to the six months ended July 31, 2024. This increase was primarily due to an increase in stock-based compensation expense of $71.7 million, an increase in employee-related expenses of $66.8 million driven by a 22% increase in average headcount, an increase in cloud hosting and related costs of $25.1 million, charges related to the Plan of $16.7 million, an increase in allocated overhead costs of $13.7 million, an increase in employee benefits of $8.9 million, and an increase in term-based software licenses of $1.9 million, partially offset by an increase in software capitalization of $10.4 million, a decrease in other labor expenses of $8.8 million, and a decrease in depreciation of data center equipment of $1.1 million.

Current wording

Research and development expenses increased by $266.6 million, or 35%, for the nine months ended October 31, 2025 compared to the nine months ended October 31, 2024. This increase was primarily due to an increase in stock-based compensation expense of $98.9 million, an increase in employee-related expenses of $93.4 million driven by a 20% increase in average headcount, an increase in cloud hosting and related costs of $35.0 million, an increase in allocated overhead costs of $21.4 million, charges related to the Plan of $16.8 million, an increase in employee benefits of $11.3 million, and an increase in term-based software licenses of $2.3 million, partially offset by a decrease in other labor expenses of $11.3 million, and an increase in software capitalization of $10.2 million.

Previous wording

The following shows general and administrative expenses for the six months ended July 31, 2025 as compared to the six months ended July 31, 2024 (in thousands, except percentages):

Current wording

The following shows general and administrative expenses for the nine months ended October 31, 2025 as compared to the nine months ended October 31, 2024 (in thousands, except percentages):

Previous wording

General and administrative expenses increased by $133.0 million, or 63%, for the six months ended July 31, 2025 compared to the six months ended July 31, 2024. The increase in general and administrative expenses was primarily due to an increase in expenses associated with the July 19 Incident and related matters of $72.9 million, an increase in stock-based compensation expense of $21.2 million, charges related to the Plan of $12.7 million, an increase in employee-related expenses of $11.8 million driven by a 16% increase in average headcount, an increase in legal expense of $3.1 million unrelated to the July 19 Incident or related matters, an increase in term-based software licenses of $2.5 million, an increase in travel expenses of $2.5 million, and an increase in allocated overhead costs of $2.4 million, partially offset by a decrease in consulting expense of $1.2 million.

Current wording

General and administrative expenses increased by $173.3 million, or 51%, for the nine months ended October 31, 2025 compared to the nine months ended October 31, 2024. The increase in general and administrative expenses was primarily due to an increase in expenses associated with the July 19 Incident and related matters of $82.0 million, an increase in stock-based compensation expense of $43.7 million, charges related to the Plan of $12.6 million, an increase in employee-related expenses of $10.5 million driven by a 19% increase in average headcount, an increase in allocated overhead costs of $3.6 million, an increase in legal expense of $3.4 million unrelated to the July 19 Incident or related matters, an increase in term-based software licenses of $2.6 million, an increase in consulting expense of $2.0 million, and an increase in travel expenses of $1.9 million.

Previous wording

The following shows interest expense, interest income, and other income (expense), net for the six months ended July 31, 2025 as compared to the six months ended July 31, 2024 (in thousands, except percentages):

Current wording

The following shows interest expense, interest income, and other income (expense), net for the nine months ended October 31, 2025 as compared to the nine months ended October 31, 2024 (in thousands, except percentages):

Previous wording

The decrease in interest income for the six months ended July 31, 2025 compared to the six months ended July 31, 2024 was driven by lower market rates, partially offset by a higher cash balance.

Current wording

The decrease in interest income for the nine months ended October 31, 2025 compared to the nine months ended October 31, 2024 was driven by lower market rates, partially offset by higher cash balance.

Previous wording

The decrease in other income (expense), net for the six months ended July 31, 2025 compared to the six months ended July 31, 2024 was primarily due to a decrease in net realized gains on our strategic investments of $6.2 million, an increase in net foreign currency transaction losses of $5.3 million, and downward adjustments and impairment of $1.6 million of our strategic investments.

Current wording

The decrease in other income (expense), net for the nine months ended October 31, 2025 compared to the nine months ended October 31, 2024 was primarily due to a decrease in net realized gains on our strategic investments of $6.2 million, an increase in net foreign currency transaction losses of $3.7 million, and downward adjustments and impairment of $1.6 million of our strategic investments, partially offset by an increase in gains from deferred compensation assets of $0.7 million.

Previous wording

The following shows the provision for income taxes for the six months ended July 31, 2025 as compared to the six months ended July 31, 2024 (in thousands, except percentage):

Current wording

The following shows the provision for income taxes for the nine months ended October 31, 2025 as compared to the nine months ended October 31, 2024 (in thousands, except percentage):

Previous wording

Our primary sources of liquidity as of July 31, 2025, consisted of: (i) $5.0 billion in cash and cash equivalents, which mainly consists of cash on hand and highly liquid investments in money market funds, U.S. Treasury bills, and time deposits, (ii) cash we expect to generate from operations, and (iii) available capacity under our $750.0 million Revolving Facility. It is not currently possible to reasonably estimate the amount of loss or range of possible loss that might result from adverse judgments, settlements, penalties, or other resolution of proceedings resulting from the July 19 Incident or related matters. However, despite such uncertainties, we expect that the combination of our existing cash and cash equivalents, cash flows from operations, and the Revolving Facility will be sufficient to meet our anticipated cash needs for working capital and capital expenditures for at least the next 12 months. Our Revolving Facility matures on January 2, 2026.

Current wording

Our primary sources of liquidity as of October 31, 2025, consisted of: (i) $4.8 billion in cash and cash equivalents, which mainly consists of cash on hand and highly liquid investments in money market funds, U.S. Treasury bills, and time deposits, (ii) cash we expect to generate from operations, and (iii) available capacity under our $750.0 million Revolving Facility. It is not currently possible to reasonably estimate the amount of loss or range of possible loss that might result from adverse judgments, settlements, penalties, or other resolution of proceedings resulting from the July 19 Incident or related matters. However, despite such uncertainties, we expect that the combination of our existing cash and cash equivalents, cash flows from operations, and the Revolving Facility will be sufficient to meet our anticipated cash needs for working capital and capital expenditures for at least the next 12 months. Our Revolving Facility matures on January 2, 2026.

Previous wording

We generally invoice our subscription customers at the beginning of the subscription term, or in some instances, such as in multi-year arrangements, in installments. Therefore, a substantial source of our cash is from such prepayments, which are included on our condensed consolidated balance sheets as deferred revenue. Deferred revenue primarily consists of billed fees for our subscriptions, prior to satisfying the criteria for revenue recognition, which are subsequently recognized as revenue in accordance with our revenue recognition policy. As of July 31, 2025, we had deferred revenue of $3.8 billion, of which $2.8 billion was recorded as a current liability and is expected to be recorded as revenue in the next 12 months, provided all other revenue recognition criteria have been met.

Current wording

We generally invoice our subscription customers at the beginning of the subscription term, or in some instances, such as in multi-year arrangements, in installments. Therefore, a substantial source of our cash is from such prepayments, which are included on our condensed consolidated balance sheets as deferred revenue. Deferred revenue primarily consists of billed fees for our subscriptions, prior to satisfying the criteria for revenue recognition, which are subsequently recognized as revenue in accordance with our revenue recognition policy. As of October 31, 2025, we had deferred revenue of $4.1 billion, of which $2.9 billion was recorded as a current liability and is expected to be recorded as revenue in the next 12 months, provided all other revenue recognition criteria have been met.

Previous wording

Net cash provided by operating activities during the six months ended July 31, 2025 was $716.9 million, which resulted from net loss of $188.6 million, adjusted for non-cash charges of $893.1 million and net cash inflow of $12.5 million from changes in operating assets and liabilities. Non-cash charges primarily consisted of $540.8 million in stock-based compensation expense, $209.9 million of amortization of deferred contract acquisition costs, $116.8 million of depreciation and amortization, $15.3 million of amortization of intangibles assets, $8.7 million of non-cash operating lease costs, $2.3 million of non-cash interest expense, and $1.6 million change in fair value of strategic investments, partially offset by $2.3 million of deferred income taxes. The net cash inflow from changes in operating assets and liabilities was primarily due to a $242.0 million decrease in accounts receivable, a $106.2 million increase in deferred revenue, and a $12.7 million increase in accrued expenses and other liabilities, partially offset by a $251.6 million increase in deferred contract acquisition costs, a $50.4 million increase in prepaid expenses and other assets, a $24.9 million decrease in accrued payroll and benefits, a $13.3 million decrease in accounts payable, and an $8.1 million decrease in operating lease liabilities.

Current wording

Net cash provided by operating activities during the nine months ended October 31, 2025 was $1.1 billion, which resulted from net loss of $222.6 million, adjusted for non-cash charges of $1.4 billion and net cash outflow of $27.4 million from changes in operating assets and liabilities. Non-cash charges primarily consisted of $822.7 million in stock-based compensation expense, $325.4 million of amortization of deferred contract acquisition costs, $180.9 million of depreciation and amortization, $23.1 million of amortization of intangibles assets, $12.6 million of non-cash operating lease costs, $3.5 million of non-cash interest expense, and $1.6 million change in fair value of strategic investments, partially offset by $5.4 million of deferred income taxes. The net cash outflow from changes in operating assets and liabilities was primarily due to an increase of $333.7 million in deferred revenue, a decrease of $116.2 million in accounts receivable, an increase of $32.6 million in accrued payroll and benefits, and an increase of $19.9 million in accrued expenses and other liabilities, partially offset by an increase of $431.7 million in deferred contract acquisition costs, an increase of $79.4 million in prepaid expenses and other assets, a decrease of $9.6 million in accounts payable, and a decrease of $9.0 million in operating lease liabilities.

Previous wording

Net cash used in investing activities of $150.6 million during the six months ended July 31, 2025 was primarily due to purchases of property and equipment of $116.2 million, capitalized internal-use software and website development costs of $34.7 million, purchases of deferred compensation investments of $2.8 million, and purchases of strategic investments of $1.4 million, partially offset by proceeds from sales of strategic investments of $4.4 million.

Current wording

Net cash used in investing activities of $641.5 million during the nine months ended October 31, 2025 was primarily due to business acquisitions, net of cash acquired, of $380.9 million, purchases of property and equipment of $199.6 million, capitalized internal-use software and website development costs of $51.5 million, purchases of strategic investments of $10.3 million, and purchases of deferred compensation investments of $4.3 million, partially offset by proceeds from sales of strategic investments of $4.9 million.